Business credit cards allow companies to easily track their business expenses. If you are running a home business, using business credit cards will allow you to keep those business expenses separated from your personal expenses. In order to get started with business credit cards you must first understand a few basic concepts pertaining to how apply for them and how to manage them.
Step # 1 - Credit card limit
Even though the business credit cards are not going to have an impact on your personal credit (unless you are using your personal cards because you have a sole proprietorship) you must still be careful about the credit card limit. Employees may not have the control you do over their spending and they may end up spending the full limit on the card. Credit cards do allow you some control over their spending as you can discuss the multiple charges on the card if they seem excessive. How much do you think you will need? Are you planning to use the card for simple purchases or are you going to use it for expensive purchases like new equipment and machinery.
Step # 2 - How many cards do you need?
Would you like every employee to have a credit card or are you going to limit it to you and a few select employees? Carefully consider which employees you are handing out credit cards to. Some of the individuals that should have a credit card include your marketing director, financial controller or bookkeeper, and the manager of the day-to-day operations of the company.
Step # 3 - Tracking method
Do you want your employees to hang onto each receipt from their credit card purchases? How are you planning to track their spending to make sure they are not abusing the business credit cards? Depending upon the card issuer, you may be able to incorporate a tracking procedure using QuickBooks and other accounting programs. Make sure you set up automatic payments with the credit card company so you don't forget to schedule your payment and risk a hefty fee and damage to your business credit.
Step # 4 - Reward cards
When you are selecting the right type of business credit cards for your company, you also need to consider how often you will use the card and if you would like a card that offers rewards. Do you want to earn mileage for flying or other benefits? It's a good idea to apply for a reward card if you do a lot of business traveling as it will allow you to have discounts on your rental car expenses and hotel expenses.
Step # 5 - Read the terms
Like a personal credit card, you need to take a good look at the terms and conditions of the credit card. Your interest rate and annual fees should be low in order to avoiding paying excess money for using the card. You also need to find out if you have overdraft protection along with 24-hour customer service benefits.
Step # 6 - Why do you need the credit card?
Are you planning to use the credit card as a small business loan? In order to gain approval for the loan, you will need to undergo the same steps as a personal credit card which includes filling out an application and also relying on your business credit report to offer lenders security as they will be able to see that you have a solid payment history and you are capable of taking on more debt. Credit cards are great for business, but they can also cause a lot of problems if you don't take the time carefully control them and control your employees from overspending the credit card limit.
Corporate Credit Concepts specializes in business credit cards. For more information about business credit cards and how it might benefit your business, please CLICK HERE for a free phone consultation.